PTEN’s rig and frac spread count slightly weakened in Q2: Patterson-UTI Energy (PTEN) averaged 128 rigs in the US in Q2 2023, while its frac spread count remained unchanged at 12 in Q2 compared to Q1. But, its average frac spread count can decline to 11 in Q3 as it stacks a Tier-2 diesel spread. While utilization was low in Q2 due to a fall in completion activity, the company expects utilization to back up in Q3. Margin, however, can come under pressure due to sufficient crew maintenance. Read more about this in our previous article here.
PTEN’s short-term and medium-term outlook: PTEN expects the commodity price volatility to affect its drilling business unfavorably in Q3. Its rig count in the US can decline to 119 in Q3. It has also lowered its FY2023 capex forecast to $485 million. However, it also believes drilling and fracking activity is fast reaching the trough and can bounce back by late 2023 and 2024. Investors may note that PTEN is set to merge with NEX in Q4 2023.
Pressure Pumping performance deteriorated in Q2: Quarter-over-quarter, PTEN’s revenues in the Contract Drilling segment increased (by 3%) in Q2 2023. Renewal of drilling rig contracts at current rates and higher average rig revenue per day led to the top line in Contract Drilling. On the other hand, its revenues from the Pressure Pumping segment decreased by 15% in Q2, due mainly to lower activity leading to increased whitespace in the calendar. Adjusted gross profit increased in Contract Drilling but fell sharply in Pressure Pumping (26%).
Thanks for reading the PTEN take three, designed to give you three critical takeaways from PTEN’s earnings report. Â Soon we will present a second update on PTEN earnings highlighting its current strategy, news, and notes we extracted from our deeper dive.
